Branching Out: Mobile Banking Finds New Users

You may not want to learn how much smaller your bank account has gotten. But banks are making it easier than ever for consumers to access account information on their mobile devices.

Big banks are offering new services or improving existing ones that allow people to access their accounts while on the go. In January,
Bank of America
Corp.
launched an updated software application that allows consumers to check their balances and pay bills through
Apple
Inc.
's iPhone.
Wells Fargo
& Co. has begun promoting a service that lets business clients approve wire transfers through their cellphones. And mobile banking is at the center of a major new ad campaign from Chase, a division of
J.P. Morgan Chase
& Co, which is offering a service that lets customers check their balances and get other information via text messages.

ENLARGE

Bank of America customers can check balances and pay bills on an Apple iPhone.
Bank of America

Smaller banks are beginning to invest in mobile services as well. BankPlus, a subsidiary of
BancPlus
Corp.
with 65 offices throughout Mississippi, unveiled a service last year that lets customers transfer funds and view their transaction history from their mobile phones. "We wanted to offer a service that the big boys offered," says
Ike Aslam,
vice president of information services at BankPlus, who adds that around 4,000 customers have signed up for the service.

Overall, the number of people in the U.S. that use mobile-banking services grew to 3.1 million in 2008 from 400,000 in 2007, and that number is expected to hit seven million this year, according to ABI Research, a technology-research firm based in New York. At the same time, the number of U.S. banks that offer mobile banking is expected to jump to 614 this year -- about 4% of all banks in the country -- from 245 in 2008, according to Aite Group, a Boston-based financial-services research firm.

More on Mobile Banking

The services are making banking more convenient for customers and small businesses. Customers can use their phones to check how much money they have in their accounts before making a purchase, or pay a bill while waiting to board a plane. Small-business owners can approve payments without having to turn on their computers. In most cases, banks are offering these services free.

Banks are investing more in mobile services despite being in dire financial straits themselves, because they believe customers -- particularly younger ones -- are likely to consider mobile banking a requirement.

"This generation expects services on their mobile phones, including banking, and it could determine where they bank," says
Mark Beccue,
an analyst at ABI Research. "You can't find a bank that isn't looking at it."

Bank of America online-banking customer Phuc Trong has begun using mobile-banking services. The 36-year-old marketing executive from Boston says he began using his Tilt smartphone from
AT&T
Inc.
last year to transfer money from his savings account to his checking account. He now uses the service two to three times a month.

Sometimes he forgets to make the transfers when he's at his computer, "but my mobile is with me all the time," Mr. Trong says. Though he says mobile banking isn't what's keeping him tied to his bank, he says he likes the service because it's simple and easy to use.

Banks have been experimenting with their mobile-banking services for years, trying to figure out what customers will actually use. Many people didn't warm to similar services when some banks offered them earlier this decade because most cellphones didn't have screens big enough to display the information. In 2002, for example, Wells Fargo scrapped a service that allowed customers to check balances and make transactions from their phones after only 2,500 people signed up for it.

Since then, however, devices with large screens like the iPhone -- and the high-speed networks they use -- have made it easier to view canceled checks and pay bills, two services that were difficult to use earlier in the decade. Other applications written for these devices, such as games, have made the idea of accessing information from a mobile phone mainstream.

Targeting BlackBerry Users

All this led Bank of America, which also ended a mobile-banking service earlier this decade, to launch a new service in 2007. The bank has since been adding features to it consistently, most recently with new applications for the iPhone and another for
Research in Motion
Ltd.
's BlackBerry.

Bank of America now has 1.9 million active users of its mobile-banking service, up from one million at the end of June 2008. About 29 million people use the bank's online-banking service from a computer.

Phoning It In

According to analysts and banks, these are the most popular mobile-banking services and features:

Checking balances.

Making sure a payment has cleared.

Transferring funds between accounts.

Paying bills.

Of all of Bank of America's mobile-banking services, the ones customers use most often are to check an account balance or make sure a transaction has cleared, says
Doug Brown,
senior vice president of mobile product development for the Charlotte, N.C., bank. That's followed by transferring funds between accounts and paying bills.

The popularity of these services is growing "as people become more familiar with the mobile Web," says Mr. Brown. Some of the services are the same ones that were available in the first iteration, but they have been completely redesigned for today's devices.

The growth of these services doesn't mean mobile banking is easy for all customers, however. Most work best on so-called smartphones, devices with big screens and Web browsers such as the iPhone and BlackBerry, which typically start at $200 compared with around $50 for a standard cellphone. About 40% of Bank of America's mobile customers access the service through an iPhone or an iPod touch; more than 60% of the people who use BankPlus's service do so via an iPhone or a BlackBerry.

In addition, many banks, citing security concerns, won't let customers add new payees or transfer money to an account over a mobile device unless they've set up the service online. The move makes it difficult for someone who finds a lost phone to steal from a mobile-banking customer by transferring funds to their own account, but legitimate customers may find it a hassle.

Mobile Credit Cards

Banks have even bigger plans for mobile phones down the road.
Citigroup
Inc.
's Citibank unit is currently testing services that use the devices in place of credit cards and allow customers to pay one another through their phones.
Debby Hopkins,
Citigroup's chief innovation officer, says the bank will introduce the services broadly once it concludes that people are ready to embrace them.

Sherri Nitta, assistant treasurer at Cimerex Energy Co. in Denver, has been using Wells Fargo's mobile-banking service aimed at businesses for about a year. She accesses the service from her BlackBerry and uses it to approve wire transfers and check the balances in the company's accounts. Ms. Nitta says the service lets her do these things while she's traveling or in the middle of meetings.

"I can very discreetly pull out my BlackBerry," she says. "My laptop is a little too obvious."

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